Mark Karpeles Possibly Charged on Suspicions of Fraudulent System Manipulation
In an exciting reddit post, it would appear that former Mt. Gox CEO Mark Karperles will be charged on suspicions of fraudulent system manipulation.
*** Edit: The validity of the article has been confirmed and Karpeles is now in police custody.***
The following is the translation from the Japanese article that appeared on Nikkei.com. The original article can be viewed here.
“In the case of the virtual currency exchange MtGox which lost a large amount of bitcoin, the Metropolitan Police Department have decided to build a case against the failed operating company’s CEO on charges of fraudulently producing and using private electromagnetic records, an official connected to the investigation revealed in an interview on the 30th. The CEO is suspected of fraudulently manipulating the system and inflating the bitcoin balance of fake accounts.
The suspicions concern the French CEO of the exchange’s operating company MTGOX (Tokyo/Shibuya) (currently under bankruptcy proceedings).
According to the official, as there are suspicions the CEO misappropriated deposited funds by fulfilling received bitcoin buy orders from fake accounts, the Metropolitan Police Department are also looking into pursuing charges of corporate embezzlement.
Last year, such as during the press conference announcing the collapse, the CEO had explained it was likely external cyber attacks that were responsible for the disappearance of the roughly 650,000 bitcoins (at the exchange rate of the 30th worth about 23 billion yen) that were in customer accounts and elsewhere.
However, this now means that very likely a portion of the bitcoins previously considered missing were fake.
MtGox at one time held a 70% market share among the world’s bitcoin exchanges.
Last February, they applied for civil rehabilitation at the Tokyo District Court.
In April of the same year, the District Court decided to commence bankruptcy proceedings.”
According to the information presented in the article, it would now appear that the majority of lost bitcoins were embezzled. At the peak of operation, Mt. Gox was responsible for clearing 70% of the world’s Bitcoin trades. If the Metropolitan Police Department is actually pursuing additional charges to Karpeles, the entire process of bankruptcy proceedings and legal actions against Karpeles could be sped up significantly. Should the Police Department be able to prove that the system was manipulated and lost funds were not stolen, former customers of Mt. Gox might still have a chance to recover funds and Mark Karpeles might finally go to jail.
We will continue to update you on the status of this story as it continues to develop and bring any new facts to light once they surface.
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Images via Mt. Gox and Pixabay.